Striking when it hurts most

The Chancellor’s move will undoubtedly direct additional money into government coffers – as well as helping UK-based businesses – but in comparison with other forms of revenue, the gain will be small. Here and in Guernsey, on the other hand, a significant pillar of our economies will be abruptly destroyed.

Quite clearly, hundreds of jobs will be lost – and lost in conditions in which those who find themselves jobless may experience considerable difficulty in finding other work. However, redundancies will not be the only adverse feature of the sector’s demise. Jersey Post will lose business which plays a vital part in helping it to balance its books, and firms involved in freight operations will also feel the effects of the Chancellor’s decision.

It is suggested that those operating fulfilment businesses will look to the law in an attempt to block the closure of the VAT loophole, but it is difficult to appreciate the sort of arguments that could be advanced to undermine the UK’s right to define its tax policies. Also, there is at least some danger that even a private sector challenge to UK authority on this matter would focus new and unwelcome UK government attention on the islands’ legitimate privileges and special rights.

In any circumstances the loss of a sector employing so many people would amount to a disaster, but it will be felt as an especially heavy blow as business and government continue to struggle to overcome the lingering effects of the recession. Moreover, the end of fulfilment – which looks to be inevitable unless some as-yet unidentified loophole can be identified – removes much-needed diversity from the Island’s economy.

The Chancellor’s action also serves as a reminder that although we in the Channel Islands enjoy a high level of autonomy and are in many respects masters of our own destinies, we are anything but immune from all decisions taken on the other side of the Channel.